The BSE Sensex fell 625 points, or 0.76%, to close at 81,551, while the NSE Nifty declined 175 points, or 0.70%, to settle at 24,826. During the session, the Sensex had dropped as much as 1,055 points, and the Nifty slipped below the 24,750 mark.
Among sectoral indices, Nifty Financial Services declined 0.6%, while Nifty IT, Auto, FMCG, and Oil & Gas shed between 0.5% and 0.9%. However, the broader market showed resilience, with the Nifty Midcap100 and Smallcap100 indices gaining 0.1% each.
Watch: Why is the stock market falling today? Sensex gyrates 1,100 points; top 5 reasons
The market capitalisation of all listed companies on BSE declined by Rs 1.1 lakh crore to Rs 443.69 lakh crore.
Why stock market fell today? Here are key reasons
1. Profit Booking After a Sharp Rally
Indian equities had witnessed a strong run-up over the past two weeks, with the Sensex and Nifty gaining around 4.1% following the Operation Sindoor ceasefire. The market capitalisation of BSE-listed firms surged by Rs 28.4 lakh crore during this period. The sharp uptick led to stretched valuations, prompting investors to book profits at higher levels.
“The domestic market witnessed volatility and snapped a two-day rally, as investors opted for profit booking driven by valuation concerns and weakness across Asian markets,” said Vinod Nair, Head of Research, Geojit Investments Limited.
2. Muted Q4 Earnings Growth
Despite the rally, Nifty50 earnings for Q4 have grown less than 6% year-on-year — a figure that falls short of market expectations. The Sensex has gained over 10,000 points since April lows, but analysts say current valuations of 21–22x forward earnings demand stronger corporate performance.
“Q4 earning season is turning out to be muted yet again in absolute terms, with 5-10% earnings growth depending on sectors,” said Atul Bhole, EVP & Fund Manager, Kotak Mahindra Asset Management.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, noted that earnings estimates for FY26 and FY27 have been revised downward. “With Nifty trading at ~22x/19x for FY26E/FY27E, there is a risk to our 26,000 target if EPS downgrades continue,” he said.
3. Rising U.S. Treasury yields
The yield on the U.S. 10-year Treasury has climbed to 4.465%, up from 3.86% in April, making U.S. bonds more attractive to global investors and drawing capital away from emerging markets like India. The 2-year yield has also risen to 3.985% from 3.62%, adding further pressure on foreign fund flows into Indian equities.
4. Weak Global Cues
Asian equities mirrored the weakness seen on Wall Street. The MSCI Asia ex-Japan index fell 0.4%. Investor sentiment remained cautious after U.S. President Donald Trump extended the deadline for trade talks with the European Union to July 9, delaying planned tariffs.
In regional markets, China’s CSI300 fell 0.56%, Shanghai Composite declined 0.2%, while South Korea’s Kospi slipped around 0.3%.
5. RBI Dividend Disappoints Market Expectations
The Reserve Bank of India recently announced a record Rs 2.69 lakh crore dividend payout to the central government — a 27% increase from last year. However, this fell short of some market estimates, which anticipated a figure closer to Rs 3 lakh crore.
Under the revised Economic Capital Framework, the RBI has raised its contingency reserve range to 6–7.5%, up from 5.5–6.5%, limiting the dividend payout.
Murthy Nagarajan, Head of Fixed Income at Tata Asset Management, said the lower-than-expected dividend may disappoint the stock market in the short term. He said, “There could be some profit booking next week after the strong rally in the past 10 days.”
